Utilities Crushed by Financial Pressure

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Extreme volatility and historically high prices in electricity futures and derivatives markets are putting some utilities and other energy companies under serious financial pressure. Covering margin calls — collateral required by trading exchanges or clearing houses to cover paper losses on electricity and gas trades — in the derivatives markets is becoming too expensive for many players and some are seeking financial help from the European Commission and member state governments. Many in the industry fear a Lehman Brothers' style collapse if governments don't step in and provide financial help. The situation will naturally require decision-making focused on short-term solvency, with unclear implications for the strategies of the affected companies — including their ability to finance low-carbon projects.

Renewable Electricity , Policy and Regulation, Gas Prices
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